Decision Analysis and Economic Evaluation

A Gentle Re-Introduction

Welcome to Nashville!

Orientation Info

  1. Welcome & Introductions
  2. Fellowship Goals and Overview
  3. Logistics at 2525 West End Ave.
  4. Amua
  5. Volunteers for Presenting Today

Example Patient

  • Lisa is a 45 year old woman with obesity (BMI 32) who has struggled with weight management.
  • She does not have diabetes but is concerned about her risk for cardiovascular disease due to weight, family Hx of heart disease, and elevated cholesterol levels.
  • Lisa heard from a friend about Wegovy, and would like her national health program to cover it for her.

Example Patient

  • Lisa works as a nurse for an Ascension hospital, which recently dropped coverage of weight-loss medications due to concerns over “long-term outcomes, national coverage benchmarks, and cost-effectiveness.”
  • Lisa’s predicament is not uncommon …

Example Patient

  • If Wegovy is not covered by the National Health Programme, it will cost Lisa $1,349 per month.
  • More broadly, how can we reconcile the health benefits of semaglutdie against the access and affordability challenges patients now face?



Decision Trees

What outcomes might Lisa experience?

What alternative to Semaglutide might she also consider?

Let’s now quantify the possible health and cost outcomes in different states of the world …

Health Outcome

Health Outcome

Cost Outcome

Let’s now summarize the overall health and cost outcomes

We can now map (average) health and cost outcomes to a plot

The Cost-Effectiveness Plane

The Efficiency Frontier

Efficiency Frontier

  • A key mechanism for decisions over how to efficiently allocate scarce resources.

  • Allows us to identify the set of potentially cost-effective treatments.

  • Strategies off the frontier cannot provide the same health benefits at equal or lower cost.

Opportunity Costs

  • Under a constrained budget we’d have to divert resources from other worthy activities (e.g., education services, income assistance programs, other medical treatments) to cover a treatment that achieves, at best, the same health outcome.

  • If we select a strategy off the frontier, there is an opportunity cost and a potential loss in social welfare.

Cost-Effectiveness Analysis

Cost-Effectiveness Analysis

  • Quantifies how to maximize the quality & quantity of life from among competing alternatives, given restricted resources.

  • It’s an explicit measure of value for money.

  • A POPULATION-LEVEL decision-making tool.

Cost-Effectiveness Analysis IS NOT

  • Indiscriminate cost-cutting
  • Downsizing
  • Intended to override individual-level decision-making.
  • The only tool for decision-making

Cost-Effectiveness Analysis

Cost of Intervention

Cost of Alternative

Benefit of Intervention

Benefit of Alternative

Cost-Effectiveness Analysis

Cost of Intervention

Cost of Alternative

Benefit of Intervention

Benefit of Alternative

Cost-Effectiveness Ratio

Cost of Intervention

\quad - \quad

Cost of Alternative

\frac{\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad}{\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad}

Benefit of Intervention

\quad - \quad

Benefit of Alternative

Cost-Effectiveness Ratio

C_1

\quad - \quad

C_0

\frac{\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad}{\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad}

E_1

\quad - \quad

E_0

Cost-Effectiveness Ratio

\Delta C

\frac{\quad \quad \quad \quad }{\quad \quad \quad \quad \quad }

\Delta E

Incremental Cost-Effectiveness Ratio

Most often used, since for most conditions there is already some available treatment.

  • C_1: net present value of total lifetime costs of new treatment
  • C_0: net present value of total lifetime costs of default treatment
  • E_1: effectiveness of new treatment, measured in expected life expectancy, quality-adjusted life years (QALYs) or disability-adjusted life years (DALYs), or some decision-relevant health outcome.
  • E_0: effectiveness of default treatment

\frac{C_1 - C_0 \quad (\Delta C)}{E_1 - E_0 \quad (\Delta E)}

Conducting a CEA

Neurologic Disease Decision Tree

Outcomes

  • C_{treat} = expected cost of treat everyone strategy.
  • C_{no treat} = expected cost of treat no one strategy.
  • C_{biopsy} = expected cost of biopsy strategy.

Outcomes

  • C_{treat} = expected cost of treat everyone strategy.
  • C_{no treat} = expected cost of treat no one strategy.
  • C_{biopsy} = expected cost of biopsy strategy.
  • E_{treat} = expected life expectancy of treat everyone strategy.
  • E_{no treat} = expected expectancy of treat no one strategy.
  • E_{biopsy} = expected expectancy of biopsy strategy.

Treat All vs. Treat None

Strategy: Treat No One

Treat All vs. Treat None

Strategy: Treat All

Key Takeaways (For Now)

  • Treatment yields higher life expectancy for those with disease, but comes at a cost.
  • Treatment yields lower life expectancy for those without the disease, and also comes at a cost.
  • Biopsy can help balance these two outcomes by better targeting treatment, but also comes with risks and costs.
  • Incremental CEA provides a transparent framework for quantifying and weighing these considerations.

Average Cost-Effectiveness Ratio

Special case where C_0 and E_0 are assumed to be zero.

  • C_1: net present value of total lifetime costs of new treatment
  • C_0: Assumed zero
  • E_1: effectiveness of new treatment, measured in expected life expectancy, quality-adjusted life years (QALYs) or disability-adjusted life years (DALYs), or some decision-relevant health outcome.
  • E_0: Assumed zero

\begin{aligned} ICER &= \frac{C_1 - 0}{E_1 - 0} \\ &= \frac{C_1}{E_1 } \end{aligned}

Non-Competing vs. Competing CEAs

Use of CEA in two situations

  1. Shopping Spree: Decision problem has non-competing programs/interventions.
  • Each program is compared to a null alternative; therefore, you’re calculating an “average” cost-effectiveness ratio.

Use of CEA in two situations

  1. Competing Choice: Decision problem has competing programs/interventions for the same purpose; these choices are mutually exclusive.
  • Two or more active alternatives in addition to the null option.
  • You need to calculate an “incremental cost- effectiveness ratio”, which gives us the added cost per unit of added benefit of an option, relative to the next less expensive choice

Non-Competing (Shopping Spree) Decision Problem

How can we measure the relative priority of various health programs that compete for limited resources?

  1. Cardiovascular disease program
  2. Safe motherhood program
  3. HIV prevention initiative
  4. Child vaccination
  5. Depression screening

Assumptions

  • Program alternatives are assumed to be independent
  • Budget constraint is only limitation
  • Neither the net cost nor the net effectiveness depend on what other programs are selected
  • Programs are assumed to be divisible [programs can be partially implemented]

Objectives: Shopping Spree Problem

Maximize the total net effectiveness (health benefit) of the programs selected.

Stay within budget.

Shopping Spree Problem

Step 1: - Rule out programs that cost $ but have negative health effects
- Dominated by alternative of “no program”

Shopping Spree Problem

Step 2:
- Select programs that are cost-saving & offer benefit; net savings can also be added to budget
- Cost-saving compared to alternative of no program

Shopping Spree Problem

Step 3:
- Rank other programs in ascending order by their cost-effectiveness ratio (lowest to highest)
- Programs are then selected from the LEAST to the MOST expensive until the budget is expended
- Final array of programs selected will depend on the budget constraint

Shopping Spree Problem

Steps 1 & 2: Rule out dominated options & select cost-saving interventions

Program Cost QALYs Status
A 27 30
B 30 20
C 56 70
D 20 40
E 30 50
F 50 75
G 40 -30 Ruled Out
H -20 20 Adopted

Shopping Spree Problem

  • Initial budget: $80
  • Budget savings: $20.
  • Total budget: $80 + $20 = $100
Program Cost QALYs Status
A 27 30
B 30 20
C 56 70
D 20 40
E 30 50
F 50 75
G 40 -30 Ruled Out
H -20 20 Adopted

Shopping Spree Problem

  • Calculate average cost-effectiveness ratio.
Program Cost QALYs C/E
A 27 30 0.90
B 30 20 1.50
C 56 70 0.80
D 20 40 0.50
E 30 50 0.60
F 50 75 0.67

Shopping Spree Problem

  • Calculate average cost-effectiveness ratio.
  • Sort (by C/E) in ascending order .
Program Cost QALYs C/E
D 20 40 0.50
E 30 50 0.60
F 50 75 0.67
C 56 70 0.80
A 27 30 0.90
B 30 20 1.50

Shopping Spree Problem

  • Calculate cumulative costs
  • Determine what is adoptable based on global budget constraint ($100)
  • Calculate cumulative effects (QALYs)

Shopping Spree Problem

Budget: $100

Program Cost QALYs C/E Cumulative Cost Cumulative QALYs
D 20 40 0.50 20 40
E 30 50 0.60 50 90
F 50 75 0.67 100 165
C 56 70 0.80 156 235
A 27 30 0.90 183 265
B 30 20 1.50 213 285

Shopping Spree Problem

Budget: $100

Program Cost QALYs C/E Cumulative Cost Cumulative QALYs
D 20 40 0.50 20 40
E 30 50 0.60 50 90
F 50 75 0.67 100 165
C 56 70 0.80 156 235
A 27 30 0.90 183 265
B 30 20 1.50 213 285
Budget Adopted Effect Threshold
100 D, E, F, H 165 0.67

Shopping Spree Problem

Budget: $150

Program Cost QALYs C/E Cumulative Cost Cumulative QALYs
D 20 40 0.50 20 40
E 30 50 0.60 50 90
F 50 75 0.67 100 165
C 56 70 0.80 156 235
A 27 30 0.90 183 265
B 30 20 1.50 213 285
Budget Adopted Cost Effect Threshold Remaining
150 D, E, F, H 100 165 0.67 50

Shopping Spree Problem

Budget: $150

Program Cost QALYs C/E Cumulative Cost Cumulative QALYs
D 20 40 0.50 20 40
E 30 50 0.60 50 90
F 50 75 0.67 100 165
C 56 70 0.80 156 235
A 27 30 0.90 183 265
B 30 20 1.50 213 285
Budget Adopted Cost Effect Threshold Remaining
150 D, E, F, H 100 165 0.67 50

Shopping Spree Problem

Budget: $150

Program Cost QALYs C/E Cumulative Cost Cumulative QALYs
D 20 40 0.50 20 40
E 30 50 0.60 50 90
F 50 75 0.67 100 165
C (89.3%) 56 70 0.80 156 235
A 27 30 0.90 183 265
B 30 20 1.50 213 285
Budget Adopted Cost Effect Threshold Remaining
150 D, E, F, C (89.3%), H 150 226.6 0.8 0
  • $50 left but program C costs $56 (50/56 = 0.89)
  • 0.89*70 QALYs of program C = 62.3 QALYs

Summary: Shopping Spree Problem

Maximize the total net effectiveness (health benefit)

Stay within budget

Can do the same with other objectives (e.g., Minimize costs, subject decision to ‘minimum benefit’ constraint, etc.)

Use of CEA in two situations

  1. Shopping Spree: Decision problem has non-competing programs/interventions.

Use of CEA in two situations

  1. Competing Choice: Decision problem has competing programs/interventions for the same purpose; these choices are mutually exclusive.

Objectives: Competing Choice Problem

Cannot implement more than one strategy at a time.

Incremental cost-effectiveness ratio is below a pre-specified adoption threshold.

What’s different?

Shopping Spree

  1. Can select multiple programs
  2. Different costs & effects associated with each
  3. Requires calculation of an Average Cost-Effectiveness Ratio

Competing Choice

  1. Programs are mutually exclusive.
  2. Different costs & effects associated with each.
  3. Requires calculation of an Incremental Cost-Effectiveness Ratio (ICER)

Incremental CEA

1. Incremental CEA in Pictures

1. Calculate incremental costs and effects

  • Often, a strategy capturing current practice (‘status-quo’, ‘do nothing’, ‘natural history’) is defined.
  • Costs and effects are then calculated for each strategy relative to the status-quo.
  • Plot the difference in costs and effects with health effects on x-axis and cost effects on y-axis.

1. Calculate cost and effects

Identify Dominated Strategies

  • We can rule out any strategies that result in less health at higher cost.
  • There is an opportunity cost to selecting these strategies.
  • The resources (budget, staff) used in the provision of a service could have been used to provide a less resource-intensive strategy that yields the same (or higher) health outcome.

Identify Dominated Strategies

Identify Dominated Strategies

  • We can also rule out strategies where some other competing strategy results in more (or equal) health at lower (or equal) cost.
  • This is known as “strong” dominance.

Identify Dominated Strategies

Identify Dominated Strategies

What about strategy B?

Hybrid Strategies

  • Suppose it is feasible to partially implement strategies A and D.
    • For example, we could implement A for 90% of the population and D for 10% of the population, or vice versa.

90% A, 10% D

10% A, 90% D

50% A, 50% D

  • Can we make any statements about B now?

Extended (Weak) Dominance

  • B is ruled out by extended (“weak”) dominance.

Extended (Weak) Dominance

Efficiency Frontier

  • The efficiency frontier is the set of non-dominated strategies.

Efficiency Frontier

  • A key initial mechanism for decisions over how to efficiently allocate scarce resources.

  • Allows us to identify the set of potentially cost-effective treatments.

  • Strategies off the frontier cannot provide the same health benefits at equal or lower cost.

Efficiency Frontier and ICERs

  • Just because something is potentially cost-effective does not mean we should adopt it.
  • Adoption depends on social value judgements on what we’re willing to pay to improve health in a population.
  • Depending on the context, we can use an incremental cost-effectiveness ratio as an input into determinations on whether adoption is “worth it.”

ICERs

  • The slope of a line connecting two points is the incremental cost-effectiveness ratio comparing those strategies. More on this later!

2. Incremental CEA in Tables

Incremental CEA






Please note that the following example uses different strategies and values than the example used in the previous pictures!

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

  4. Determine dominated strategies (ICER<0).

  5. Re-calculate ICERs after eliminating dominated strategies.

  6. Determine strategies ruled out by extended dominance.

  7. Re-calculate ICERs after ruling out all dominated strategies.

  8. Repeat 5-7 as needed.

Incremental CEA

1. Calculate costs and effects for each strategy.

Strategy Cost QALYs
A 16,454 17.33
D 24,504 17.49
C 33,443 17.58
B 21,457 17.41
E 43,332 17.49

Incremental CEA

  1. Calculate costs and effects for each strategy.

2. Sort table by costs in ascending order.1

Strategy Cost QALYs
A 16,454 17.332
B 21,457 17.409
D 24,504 17.491
C 33,443 17.580
E 43,332 17.491

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

3. Calculate ICER based on difference in costs and effects.

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 9,888 17.491 -0.088 -112,048

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

4. Determine dominated strategies (ICER<0)

Determining Dominated Strategies

  • Let’s take a look at our table.
  • Notice that strategy E has a negative ICER. Why is this?
  • Strategy E raises costs but lowers QALYs.
  • Therefore, we’d be better off by selecting strategy C (we would get more health gain for less money…)
Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 9,888 17.491 -0.088 -112,048

Determining Dominated Strategies

  • Strong dominance refers to situations where one strategy is preferred over another on both costs and health effects (e.g., QALYs).
  • When we identify a strongly dominated option, we remove it from the table and re-calculate ICERS based on the remaining strategies.
Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 9,888 17.491 -0.088 -112,048 Dominated

A Brief Aside on Negative ICERs

  • We want to rule out strategies that cost more but result in less health.
    • This implies a negative ICER.
  • But what other scenario would result in a negative ICER?
    • Strategy adds health but reduces costs.
    • This is a great strategy!

Both Strategies Have a Negative ICER

A Brief Aside on Negative ICERs

  • For this reason, it is poor practice to report negative ICERs.
  • Be careful when deleting a strategy becuase it has a negative ICER!
    • It may be a great strategy!

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

4. Determine dominated strategies (ICER<0)

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 9,888 17.491 -0.088 -112,048 Dominated

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

  1. Determine dominated strategies (ICER<0).

5. Re-calculate ICERs after eliminating dominated strategies.

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491 -112,048 Dominated

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

  1. Determine dominated strategies (ICER<0).

  2. Re-calculate ICERs after eliminating dominated strategies.

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491

Determining Dominated Strategies

  • We’re not quite done yet
  • Notice something odd about strategy B?
  • Its ICER is higher than the next most costly alternative (strategy D)
Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491

Determining Dominated Strategies

  • A telltale sign of extended dominance in a (sorted) CEA table is a strategy with a higher ICER than the next most expensive option.
Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895 Dominated (Extended)
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491 Dominated

Determining Dominated Strategies

  • You can see this in the pictures as well ….

Incremental CEA

  1. Calculate costs and effects for each strategy.

  2. Sort table by costs in ascending order.1

  3. Calculate ICER based on difference in costs and effects.

  1. Determine dominated strategies (ICER<0).

  2. Re-calculate ICERs after eliminating dominated strategies.

6. Determine strategies ruled out by extended dominance.

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
B 21,457 5,003 17.409 0.077 64,895 Dominated (Extended)
D 24,504 3,048 17.491 0.082 36,989
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491 Dominated

Incremental CEA

7. Re-calculate ICERs after ruling out all dominated strategies.

Strategy Cost dCost QALYs dQALYs ICER
A 16,454 17.332
D 24,504 8,050 17.491 0.159 50,478
C 33,443 8,939 17.580 0.088 101,292
E 43,332 17.491 Dominated
B 21,457 17.409 Dominated (Extended)
  • Strategy D is more expensive than Strategy B, but Strategy D is gaining health MORE EFFICIENTLY than Strategy B

Practice: Weight-Loss Medication

Practice: Weight-Loss Medication

  • The Institute for Clinical and Economic Review (ICER) is a non-profit organization that evaluates the cost-effectiveness of new drugs and therapies.
    • Reports are used by payers to inform coverage decisions.
    • Reports are also used by manufacturers to inform pricing decisions.
  • Next slides summarizes ICERs findings on weight loss therapies.

Practice: Weight-Loss Medication

Five different therapeutic and lifestyle strategies to reduce weight.

Strategy Cost QALY
Semaglutide (Wegovy) 392,100 17.83
Liraglutide (Saxenda) 277,000 17.34
Phentermine/Topiramate (Qsymia) 182,600 17.38
Bupropion/Naltrexone (Contrave) 207,300 17.16
Lifestyle Modification 179,200 16.93

Calculate Incremental Costs and QALY

Strategy Cost Incremental Cost QALYs Incremental QALYs
Lifestyle Modification 179,200 0 16.93 0.00
Phentermine/Topiramate (Qsymia) 182,600 3,400 17.38 0.45
Bupropion/Naltrexone (Contrave) 207,300 24,700 17.16 -0.22
Liraglutide (Saxenda) 277,000 69,700 17.34 0.18
Semaglutide (Wegovy) 392,100 115,100 17.83 0.49

Calculate incremental costs per QALY

Strategy Incremental Cost Incremental QALYs Incremental Cost per QALY
Lifestyle Modification 0 0.00
Phentermine/Topiramate (Qsymia) 3,400 0.45 7,556
Bupropion/Naltrexone (Contrave) 24,700 -0.22 -112,273
Liraglutide (Saxenda) 69,700 0.18 387,222
Semaglutide (Wegovy) 115,100 0.49 234,898

Determine dominated strategies

Strategy Incremental Cost Incremental QALYs Incremental Cost per QALY Status
Lifestyle Modification 0 0.00
Phentermine/Topiramate (Qsymia) 3,400 0.45 7,556
Bupropion/Naltrexone (Contrave) 24,700 -0.22 -112,273 Dominated (Strong)
Liraglutide (Saxenda) 69,700 0.18 387,222
Semaglutide (Wegovy) 115,100 0.49 234,898

Remove dominated strategies and recalculate

Determine dominated strategies

Strategy Cost Incremental Cost QALYs Incremental QALYs
Lifestyle Modification 179,200 0 16.93 0.00
Phentermine/Topiramate (Qsymia) 182,600 3,400 17.38 0.45
Liraglutide (Saxenda) 277,000 94,400 17.34 -0.04
Semaglutide (Wegovy) 392,100 115,100 17.83 0.49

Determine dominated strategies

Strategy Incremental Cost Incremental QALYs Incremental Cost per QALY Status
Lifestyle Modification 0 0.00 0
Phentermine/Topiramate (Qsymia) 3,400 0.45 7,556
Liraglutide (Saxenda) 94,400 -0.04 -2,360,000 Dominated (Strong)
Semaglutide (Wegovy) 115,100 0.49 234,898

Remove dominated strategies and recalculate

Determine dominated strategies

Determine dominated strategies

Strategy Cost Incremental Cost QALYs Incremental QALYs
Lifestyle Modification 179,200 0 16.93 0.00
Phentermine/Topiramate (Qsymia) 182,600 3,400 17.38 0.45
Semaglutide (Wegovy) 392,100 209,500 17.83 0.45

Determine dominated strategies

Strategy Incremental Cost Incremental QALYs Incremental Cost per QALY Status
Lifestyle Modification 0 0.00 0
Phentermine/Topiramate (Qsymia) 3,400 0.45 7,556
Semaglutide (Wegovy) 209,500 0.45 465,556

Final Table

Strategy Incremental Cost Incremental QALYs Incremental Cost per QALY Status
Lifestyle Modification 0 0.00 0
Phentermine/Topiramate (Qsymia) 3,400 0.45 7,556
Semaglutide (Wegovy) 209,500 0.45 465,556
Bupropion/Naltrexone (Contrave) 24,700 -0.22 -112,273 Dominated (Strong)
Liraglutide (Saxenda) 94,400 -0.04 -2,360,000 Dominated (Strong)

Where to draw the line?

CEA Thresholds

  • So now we have our ICERs, but how do we make a decision?
  • We must define a threshold (\lambda), or an ICER value that determines whether or not we implement a given strategy.
    • Also known as “willingness-to-pay” (WTP) threshold.

CEA Thresholds

What are common thresholds and how are they determined?

  • In high income countries, common thresholds are $50,000/QALY, $100,000/QALY, and $150,000/QALY.
  • In LMICs, 0.5-3x per capita gross domestic product (GDP) per DALY averted.
  • More on this in a few minutes.

How do CEA Thresholds Guide Decisionmaking?

How do CEA Thresholds Guide Decisionmaking?

CEA Thresholds

CEA Thresholds

CEA Thresholds

CEA Thresholds

Different ways thresholds have been estimated:

  • “Supply-side” (UK & Europe)
  • “Demand-side” (US) - per capita consumption (US/LMICs)

Opportunity cost (“supply-side”)


  • Decision should be informed by the value of what will be given up as a consequence of those costs.

  • If resources are committed to the funding of one intervention, then they are not available to fund and deliver others (shopping spree concept)

  • The opportunity cost of a commitment of resources is the health forgone because these “other” interventions that are available to the health system cannot be delivered.

Opportunity cost (“supply-side”)

Opportunity cost (“supply-side”)


  • If you don’t consider the budget under which you are operating, then some medications could take up half the budget.

  • This would displace interventions that produce significant health gain OR in the US, could increase premiums or take away $ from other sectors

Opportunity cost (“supply-side”)


  • Some have argued that the threshold should be lower/on the more conservative end for higher priced therapies.
    • NICE (UK) uses a budget impact threshold of 20,000 GBP/QALY for these higher priced therapies as opposed to 30,000 GBP/QALY for others.

Willingness to pay (“demand-side”)

  • Given that we don’t have “fixed” budget, per se, the US has largely defined thresholds based on what is often referred to as “demand-side” or “willingness-to-pay” criteria.

  • Intuition: willingness to forego other types of consumption to improve one’s health.

  • This willingness to pay has been derived through surveys & also what Medicare has been willing to pay for interventions (e.g., ESRD)

Back to the Wegovy Example

Weight Loss Coverage in the UK (\lambda)

  • England’s National Health Service is most likely to pay for drugs that cost £20,000, or about $25,000 per QALY.
Strategy Cost QALY ICER Status
Lifestyle Modification 179,200 16.93
Phentermine/Topiramate (Qysmia) 182,600 17.38 7,556
Semaglutide (Wegovy) 392,100 17.83 465,556
Bupropion/Naltrexone (Contrave) 207,300 17.16 Dominated (Strong)
Liraglutide (Saxenda) 277,000 17.34 Dominated (Strong)

Source: ICER Final Report on Semaglutide

Would our example patient have access to Wegovy in the UK?

Patient Heterogeneity

  • Returns to treatment may vary by relevent patient subgroups.

  • “Heterogeneity” refers to the extent to which between-patient variability can be explained by patients’ characteristics.

Patient Heterogeneity

  • Clinically-relevant heterogeneity suggests identification of subgroups for whom separate cost-effectiveness analyses should be undertaken.

  • Such analyses may inform alternative decisions regarding the service provision to each subgroup, or contribute to a weighted analysis of the aggregate group

Source: Briggs et al (2012)

Source: National Institute for Health and Care Excellence (NICE)

Would our example patient have access to Wegovy in the UK?

Availability and Access to Wegovy

Country Would National Health Program Cover?
US ($1,349) No and Yes (with PA)
UK ($378) No
France [not yet avail.] No
Germany ($328) No
Spain [not avail.] No
Netherlands ($296) No

CEA Thresholds in LMICs

  • Thresholds in low and middle income countries (LMICs) often based on 1-3X per capita Gross Domestic Product (GDP)

  • Roughly corresponds to what has become convention for high-income countries (1X per capita GDP in the US is around $60,000.

Questions?

Vital Strategies & CDC Foundation Health Economics Fellowship